Is there such a thing as antitrust exemption health insurance companies?
The quick response to this question is yes. In fact, all health insurance companies are exempt from federal antitrust laws since the passage of the McCarran-Ferguson Act of 1945. It is this exemption that some blame for the rapidly rising cost of health insurance.
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While the Affordable Care Act of 2010 did not touch the antitrust exemption, another law that has been introduced in congress, the Health Insurance Industry Fair Competition Act, would amend the McCarran-Ferguson Act and repeal the antitrust exemption.
What does antitrust exemption mean for the health insurance industry?
According to WhiteHouse.gov, exemption from federal antitrust laws allows the health insurance industry to engage in practices such as bid rigging and price fixing, which cause health insurance rates to rise dramatically. Companies can consolidate and work together along with hospitals and physicians in order to turn a substantial profit.
In fact, health insurance industry profits are rising ten times faster than inflation. This practice continues despite the fact that more and more private individuals are unable to afford health insurance and therefore receive adequate medical care. The only other industry exempt from these antitrust laws is Major League Baseball!
What is being done to control health insurance company monopolies?
Although the recent passage of the Affordable Care Act of 2010 did nothing to change the antitrust exemption, several lawmakers, both democrats and republicans, have supported a law named the Health Insurance Industry Fair Competition Act which would alter the McCarran-Ferguson Act of 1945 placing greater trust restrictions on health insurance companies.
This law passed the House easily with a vote of 406 to 19 in February of 2010, but has stalled in the Senate. If the law were to pass, proponents say it would create greater competition within the health care industry driving down costs to consumers. Some, including President Obama, say this could save consumers billions of dollars every year.
Who opposes an end to antitrust exemptions for health insurance companies?
As is to be expected health insurance companies and special interest groups working for the insurance industry naturally oppose any laws that would change the antitrust exemption and impact profits for these companies. Some lawmakers also oppose this legislation. These individuals say that it is not necessary to change the laws because, while the companies are exempt from federal antitrust laws, they are still subject to all state laws and regulations.
Additionally, they argue that repealing the antitrust exemption laws could make health insurance costs actually rise. The theory behind this is that with more independent insurance companies, those with wider markets would still be able to raise their rates and this would force smaller companies to do the same or risk being unable to compete.
What does the future hold for the insurance industry and antitrust exemption?
Whether or not the Health Insurance Industry Fair Competition Act eventually passes will most likely not be the end of the debate as to whether or not health insurance companies should be subject to antitrust laws. This is not the first time lawmakers have attempted to change the McCarran-Ferguson Act. The last time was during the Clinton administration in the late 1990s.
Another aspect of the Affordable Care Act that may affect the antitrust exemption debate is the implementation of Accountable Care Organizations (ACOs) beginning in January of 2012 with Medicare coverage and expanding to the wider health insurance market shortly after. These alternatives to Health Maintenance Organizations (HMOs) link doctors, hospitals, and insurance companies and financially reward them for providing improved care at a lower cost. By linking these aspects of the health care industry, they are potentially creating additional monopolies. Opponents feel this plan will fail to lower health care costs.
Whichever side of the debate you are on, you can be sure you will hear more about this in the future as one thing all sides can agree on is the need to make health care more affordable and accessible to all. How to do that is more complicated and ending antitrust exemptions is just one of many ideas for lowering costs.
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